PagSeguro
Digital Ltd. (the “Company”) announced today its fourth quarter and full
year results for the period ended December 31, 2017. The Company´s
consolidated financial statements are presented in Reais (R$), unless
otherwise indicated, in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”).

Fourth Quarter 2017 Financial & Operational Highlights:

R$13.6 billion in total payment volume (TPV), up 183.4%
year-on-year

Active merchants in the last 12 months of 2.8 million, up 97.8%
year-on-year, with growth of 1.4 million net new merchants

R$831.0 million in total net revenue*, up 118.1%
year-on-year

R$188.9 million in net income, up 390.6% year-on-year

Net Margin of 22.7%, up 12.6 percentage points
year-on-year

Full Year 2017 Financial & Operational Highlights:

R$38.5 billion in total payment volume (TPV), up 173.2%
year-on-year

R$2.5 billion in total net revenue*, up 121.7%
year-on-year

R$478.8 million in net income, up 276.4% year-on-year

Net Margin of 19.0%, up 7.8 percentage points
year-on-year

Main Operational and Financial Indicators (R$ millions)

4Q17

4Q16

Var.%

2017

2016

Var.%

TPV

13,641.1

4,813.2

183.4%

38,476.8

14,085.1

173.2%

Active Merchants (LTM)

2,791.2

1,410.8

97.8%

2,791.2

1,410.8

97.8%

Total Net Revenue*

831.0

381.0

118.1%

2,523.4

1,138.4

121.7%

Net Income

188.9

38.5

390.6%

478.8

127.2

276.4%

Net Margin (%)

22.7%

10.1%

12.6 pp

19.0%

11.2%

7.8 pp

*Total revenue and income

Financial Discussion:

Total Net revenue*

Total net revenue*, which includes revenue from transaction activities
and other services, revenue from sales and financial income amounted to
R$2,523.4 million in 2017, an increase of 121.7 % from
R$1,138.4 million in 2016.

*Total revenue and income

Revenue from transaction activities and other services

Net revenue from transaction activities and other services in 2017
amounted to R$1,224.3 million, an increase of R$744.2 million,
or 155.0%, from R$480.0 million in 2016.

The year-on-year increase was mainly due to a continued increase in our
customer base and TPV.

Net revenue from transaction activities and other services during 2017
increased by a lesser percentage than our TPV, which increased to R$38.5
billion from R$14.1billion in 2016 or 173.2%. This fact was
mainly due to the higher proportion of debit card transactions in our
TPV in 2017 as compared to 2016.

Revenue from sales

Net revenue from sales in 2017 amounted to R$471.9 million, an
increase of R$211.3 million, or 81.1%, from R$260.6
million in 2016. However, in relative terms, the share from POS sales
has decreased from 23% in 2016 to 19% in 2017. In addition, in 4Q17 the
share of POS device sales has decreased to 13% from 25% in 4Q16.

Financial income

Financial income, which represents the finance discount we withhold from
the early payment of receivables on the 2nd through the 12th
installment, amounted to R$818.6 million in 2017, an increase of
R$426.2 million, or 108.6% from R$392.4 million in 2016.

The year-on-year growth in this activity was due to growth in our TPV.

Other financial income

Other financial income amounted to R$8.6 million in 2017, an
increase of R$3.2 million, or 60.7% from R$5.3 million in
2016.

Expenses

Total expenses amounted to R$1,839.9 million in 2017, an increase
of R$856.9 million, or 87.2% from R$983.0 million in 2016.
As a percentage of our Total revenue and income, our total expenses in
2017 decreased by 13.4 percentage points, to 72.9% in 2017
from 86.3% in 2016.

Cost of sales and services

Cost of sales and services amounted to R$1,324.4 million in 2017,
an increase of R$700.7 million, or 112.4% from
R$623.7 million in 2016. As a percentage of the total of our Net revenue
from transaction activities and other services and our Net revenue from
sales, our Cost of sales and services posted a decrease of 6.1 percentage
points, to 78.1% from 84.2% in 2016.

Within our Cost of sales and services line item, our Cost of services,
expressed as a percentage of our Net revenue from transaction activities
and other services, decreased to 67.8% from 74.5% in 2016. This
decrease reflected ongoing economies of scale due to growth in our TPV.

Our Cost of sales, expressed as a percentage of our Net revenue from
sales, posted a slight increase to 104.8% in 2017 from 102.0% in
2016.

Selling expenses

Our Selling expenses amounted to R$245.8 million in 2017, an
increase of R$45.8 million, or 22.9% from R$199.9 million
in 2016. As a percentage of our Total revenue and income, our Selling
expenses decreased by 7.9 percentage points, to 9.7% in
2017 from 17.6% in 2016. Our Marketing and advertising costs, while
increased in absolute terms, decreased significantly as a percentage of
Total revenue and income due to TPV growth.

Administrative expenses

Our Administrative expenses amounted to R$153.2 million in 2017,
an increase of R$68.7 million, or 81.4%, from
R$84.5 million in 2016. This increase was mainly due to an increase in
personnel costs, bank and consulting fees. As a percentage of our Total
revenue and income, our Administrative expenses decreased by 1.3
percentage points, to 6.1% in 2017 from 7.4% in 2016.

The reduction in the level of our Administrative expenses as a
percentage of our Total revenue and income over the last three years
reflects the scalable nature of our business.

Financial expenses

Our Financial expenses amounted to R$104.5 million in 2017, an
increase of R$36.2 million, or 53.1%, from expenses of
R$68.3 million in 2016.

Expressed as a percentage of our Financial income, our Financial
expenses represented 12.8% in 2017 and 17.4% in 2016.

Other (expenses) income, net

Our Other (expenses) income, net, recorded expenses of R$12.0 million
in 2017. This net amount principally reflected expenses related to
contingency proceedings during the year.

Profit before income taxes

Profit before income taxes amounted to R$683.5 million in 2017,
an increase of R$528.1 million, or 340.0%, from
R$155.4 million in 2016. The increase was due to growth in our Total
revenue and income.

Income tax and social contribution

Income and social contributions tax amounted to expenses of R$204.7 million
in 2017, an increase of R$177.1 million from expenses of
R$27.6 million in 2016.

This total item consists of Current income tax and social contribution
and deferred income tax and social contribution, which relates
principally to the tax benefit under the Lei do Bem, which
applies to investments made in innovation and technology by PagSeguro
Brazil.

Total effective tax rate was 30.0% in 2017, compared with 17.8%
in 2016.

The increase in 2017 was due to the increase in our Profit before income
taxes while the amount of our Lei do Bem tax benefits remained
stable.

Net income

Net income for the year in 2017 amounted to R$478.8 million, an
increase of R$351.6 million, or 276.4%, from R$127.8
million in 2016.

This increase was principally driven by the volume growth in both our
net revenue items as well growth in income from our early payment of
receivables and operating leverage.

New Products

In February, PagSeguro launched a new functionality for its Moderninha
Pro and Moderninha Wifi devices, enabling multiple merchants to share a
single point-of-sale device. With this new functionality, each terminal
can serve up to six digital accounts, handling sales transactions for
each account separately and allowing entrepreneurs and merchants to
manage multiple businesses using a single POS device.

In March, PagSeguro launched the Minizinha Chip, its pocket
point-of-sale device, an innovative new concept for POS terminals, that
combines all of the high-end functionalities such as Wifi and GPRS
connection within compact hardware that can literally fit in the
merchants’ pocket.

Ideal for small merchants and micro entrepreneurs seeking mobility and
convenience, this pocket point-of-sale device no longer requires
smartphone pairing like other traditional mobile POSs, since it comes
with a SIM card and free data plan, thus improving the merchant
experience.

Earnings webcast

PagSeguro (NYSE: PAGS) will host a conference call and earnings webcast
on March 09th , at 09:00 am EST. The conference dial in in
the US and International is 1-800-492-3904 or +1 646 828-8246.
Connection in Brazil 55 11 3193-1001 or 55 11 2820-4001. Conference ID
is PagSeguro.

To listen to a live webcast, please visit PagSeguro´s IR website at investors.pagseguro.com.
A replay will be available on the same website following the call.

About PagSeguro:

PagSeguro Digital is a disruptive provider of financial technology
solutions focused primarily on micro-merchants, small companies and
medium-sized companies in Brazil. PagSeguro Digital’s business model
covers all of the following five pillars:

Issuer of prepaid cards to clients for spending or withdrawing account
balances; and

Operating as an acquirer.

PagSeguro Digital is an UOL Group Company that provides an easy, safe
and hassle-free way of accepting payments, where its clients can
transact and manage their cash, without the need to open a bank account.
PagSeguro Digital’s end-to-end digital ecosystem enables its customers
to accept a wide range of online and in-person payment methods,
including credit cards, debit cards, meal voucher cards, boletos,
bank transfers, bank debits and cash deposits.

PagSeguro Digital’s mission is to disrupt and democratize financial
services in Brazil, a concentrated, underpenetrated and high interest
rate market, by providing an end-to-end digital ecosystem that is safe,
affordable, simple and mobile-first for both merchants and consumers.
For more information visit http://investors.pagseguro.com.

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